Latest news with #DataCenterSales
Yahoo
01-08-2025
- Business
- Yahoo
WESCO International Inc (WCC) Q2 2025 Earnings Call Highlights: Strong Data Center Sales and ...
Organic Sales Growth: 7% year-over-year in Q2. Data Center Sales: Surpassed $1 billion, up 65% year-over-year. CSS Organic Growth: 17% in Q2. EES Organic Growth: 6% in Q2. UBS Sales Decline: 4% year-over-year. Adjusted EBITDA Margin: Up 90 basis points sequentially. Gross Margin: 21.1%, flat sequentially, down 80 basis points year-over-year. Adjusted EPS: $3.39, up 6% from the prior year. Free Cash Flow: $87 million in Q2, 45% of adjusted net income. Backlog Growth: Record levels, up year-over-year and sequentially. Preferred Stock Redemption: Completed in June, improving earnings and cash flow. Full Year Organic Sales Growth Outlook: Increased to 5% to 7%. Free Cash Flow Outlook for 2025: $600 million to $800 million. Warning! GuruFocus has detected 10 Warning Signs with WCC. Release Date: July 31, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Positive Points WESCO International Inc (NYSE:WCC) reported a strong acceleration in sales momentum, with organic sales growing 7% in Q2, marking three consecutive quarters of growth. Data center sales surpassed $1 billion in the second quarter, up 65% year-over-year, driven by AI-driven data centers. Adjusted EBITDA margin improved by 90 basis points sequentially due to strong operating cost leverage and stable gross margin. The company completed the redemption of its preferred stock, strengthening the balance sheet and improving earnings and cash flow run rates. Backlog reached record levels, increasing both year-over-year and sequentially across all three business units, indicating strong future demand. Negative Points Utility sales declined in the first half of the year, with UBS sales down 4% year-over-year in Q2, although there are signs of improvement. Gross margin was down 80 basis points year-over-year due to project and product mix in CSS and EES. Adjusted SG&A increased approximately 8% year-over-year, driven by higher employee and facility costs. The company faces potential impacts from recent tariff announcements, including supplier price increases and potential lower customer demand. Adjusted EBITDA margin for UBS was down 160 basis points year-over-year, reflecting challenges in the utility market. Q & A Highlights Q: Can you confirm if the gross margin benefit from any price increases in the second half of the year is included in the guidance? Also, have you seen a genuine demand increase in July, or was it mainly due to easier comparisons? A: None of the tariff impacts, whether on sales or gross margin, are included in our second half outlook. Regarding July, we are encouraged by the start. CSS continues its momentum, EES shows accelerating growth, and UBS is now tracking positive growth, indicating accelerating momentum. Q: Can you provide more insight into the utility segment, particularly the trends in investor-owned utilities (IOUs) and public power customers? A: IOUs, which form the largest part of our utility sales, returned to growth in Q2, driven by new program wins and resumed shipments. Public power customers were still down due to a slower recovery. However, we expect public power to return to growth in the second half, supported by a strong backlog in transmission and substation business. Q: With the significant increase in the data center outlook for 2025, what metrics are you tracking to ensure these trends continue? A: We have strong visibility due to our direct end-user customer relationships, including hyperscalers and enterprise-class customers. We track customer R&D investment plans and build schedules. Our backlog growth, up 11% sequentially and 36% year-over-year, provides a good look into future demand. Q: How has the growth opportunity in gray space versus white space in data centers evolved? A: We have a strong position in white space, but gray space is growing faster, with EES sales into data centers growing at 90% year-over-year in Q2. While the majority of sales are still in white space, the gray space is expanding due to our role as a one-stop shop for end-user data center customers. Q: Can you clarify the impact of copper price fluctuations on your business and the potential sales slowdown in the rest of the quarter? A: Commodities, including copper, represent a mid-single-digit percentage of our revenue, with prices typically repriced weekly. We saw some copper benefit in Q2, but it was not material. It's challenging to discern the impact of pricing in July, and we haven't seen a material impact from copper volatility through Q2. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.
Yahoo
11-07-2025
- Business
- Yahoo
Methode Electronics Inc (MEI) Q4 2025 Earnings Call Highlights: Navigating Challenges with ...
Revenue: $257 million for Q4, a decrease of 7% year-over-year. Free Cash Flow: $26 million in Q4, the best quarter since Q4 of fiscal '23. Adjusted Loss from Operations: $22 million, with $15 million due to unplanned inventory adjustments. Adjusted EBITDA: Negative $7.1 million for Q4, down $12.4 million year-over-year. Net Cash from Operating Activities: $35.4 million in Q4, compared to $24.9 million in fiscal '24. Debt Reduction: Debt reduced by $10 million from Q3. Power Products and Data Center Sales: Record sales exceeding $80 million for the full year. EV Sales: 20% of consolidated total for the full year, up from 19% the previous year. Fiscal 2026 Sales Guidance: Expected to be $900 million to $1 billion. Fiscal 2026 EBITDA Guidance: Expected to be $70 million to $80 million, with a doubling of EBITDA margin from 4.1% to 7.9%. Warning! GuruFocus has detected 6 Warning Signs with MEI. Release Date: July 10, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Methode Electronics Inc (NYSE:MEI) achieved $26 million in free cash flow in the fourth quarter, marking the best quarter since Q4 of fiscal '23. The company set records for data center power product sales, finishing the year with over $80 million in sales, nearly double the previous year. Operational improvements led to a $12 million improvement in tooling recovery and a $22 million reduction in accounts receivable. Despite a projected $100 million decline in sales for fiscal '26, MEI expects to double its EBITDA due to operational improvements. The company successfully launched 22 new programs in fiscal '25 and expects to launch another 30 in fiscal '26, indicating strong future growth potential. MEI experienced a $22 million adjusted loss from operations in the fourth quarter, with $15 million attributed to unplanned inventory adjustments. The company faced significant challenges due to reduced, delayed, or canceled EV programs, particularly from Stellantis, impacting future demand projections. Historical warranty and quality issues contributed approximately $5 million to the quarterly loss. MEI's fiscal '26 sales are expected to be approximately $100 million lower than fiscal '25 due to soft market outlook and EV program delays. The company had to amend its credit agreement, reducing the facility capacity and revising covenant ratios, indicating financial constraints. Q: Jon, you mentioned that despite a $100 million sales decline, you expect EBITDA to rise in fiscal '26. Can you explain the key earnings levers given this sales decline? A: Jonathan DeGaynor, President and CEO, explained that the company has improved its launch processes, reducing concerns about incremental costs for new launches. The significant drop in EV demand has created a revenue gap, but several one-off expenses from fiscal '25, such as warranty reserves and restructuring costs, are either eliminated or improved, supporting the expectation of doubling EBITDA despite lower sales. Q: Regarding the 30 launches in fiscal '26, how many are related to EV platforms, and how do you mitigate risks of delays or volume changes? A: Jonathan DeGaynor stated that about 50% of the launches are related to EV platforms. The company uses third-party data to guide its projections and has taken steps to reduce costs and utilize its engineering and fixed assets for other markets, such as data centers, to mitigate risks associated with EV program delays or cancellations. Q: Can you clarify the impact of Stellantis on your revenue expectations and how it has changed? A: Jonathan DeGaynor noted that Stellantis' program volumes dropped significantly, leading to a $200 million swing from initial projections. The company is actively working with customers to address these changes and is leveraging its capabilities to support growth in other areas, such as data centers. Q: How does the reduction in dividend relate to your financial strategy and covenant changes? A: Jonathan DeGaynor explained that the dividend reduction aligns with peer yields and provides flexibility for working capital. It also considers covenant requirements, ensuring the company maintains financial stability while addressing market challenges. Q: With the automotive revenue decline, do you expect growth in the industrial side of the business? A: Jonathan DeGaynor confirmed that growth is expected in the industrial segment, particularly in data centers and lighting, which will help balance the business and reduce reliance on automotive revenue. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
